TOURISM AND HOSPITALITY

Transcription

1 (As of 3 May 2017) 1

2 Executive Summary Advantage India... 4 Market Overview and Trends Porters Five Forces Analysis 18 Strategies Adopted.. 20 Growth Drivers Opportunities Success Stories Useful Information

3 EXECUTIVE SUMMARY New Visa Reforms Electronic tourist authorisations, known as E Tourist Visa, launched by the Government of India has resulted in increase in number of tourist visa issued in the country, with nearly 10,79,696 tourists visiting India, as of December Contribution to GDP above world average India ranked 3 rd among 184 countries in terms of travel & tourism s total contribution to GDP in 2016 In India, the sector s direct contribution to GDP is expected to grow by 7.9 per cent per annum during Creating higher employment The travel & tourism sector in India is estimated to account for 9 per cent of the total employment opportunities generated in the country in 2016, providing employment to around 38.4 million people during the same year. The number is expected to rise by 2 per cent annum to million jobs by 2026 Higher investments Travel & tourism s contribution to capital investment is projected to grow 6.3 per cent per annum during , higher than the global average of 4.5 per cent Increasing visitor exports Contribution of visitor exports to total exports is estimated to increase 7.2 per cent per annum during compared to the world average of 4.3 per cent Source: World Travel & Tourism Council s (WTTC s) Economic Impact 2015, TechSci Research 3

4 ADVANTAGE INDIA

5 ADVANTAGE INDIA 2016 Market size: USD208.5 billion Robust demand Growing demand Foreign tourist arrivals expected to increase at a CAGR of 7 per cent over India recorded 8 million foreign tourist arrivals in 2015, registering an annual growth of 8.1 per cent over the previous year By 2020, medical tourism industry of India is expected to touch USD8 billion 8.9 million foreign tourists visited India in 2016, witnessing increase of 11 per cent from 2015 Diverse attractions India offers geographical diversity, attractive beaches, 30 World Heritage Sites & 25 bio-geographic zones Advantage India Attractive opportunities India has a diverse portfolio of niche tourism products cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural & religious tourism India is expected to receive nearly half a million medical tourists by 2015, implying an annual growth of 30 per cent In January 2016, Federation of Indian Chambers of Commerce & Industry (FICCI) announced the launch of India Travel startup Launchpad. Policy support The Visa on Arrival scheme was extended to 150 countries in F Market size: USD423.7 billion The country s big coastline is dotted with a number of attractive beaches A 5-year tax holiday has been offered for 2-,3- and 4- star category hotels located around UNESCO World Heritage sites (except Delhi & Mumbai) Source: WTTC, Ministry of Finance, TechSci Research Notes: F stands for Forecasts, WTTC World Travel and Tourism Council, Market size forecasts by WTTC, F-Forecast UNESCO United Nations Educational, Scientific and Cultural Organisation, MICE Meetings, Incentives, Conferences, and Exhibitions 5

6 MARKET OVERVIEW

7 EVOLUTION OF THE INDIAN TOURISM AND HOSPITALITY SECTOR onwards Pre-1990 The National Tourism Policy was announced in 1982 The government formulated a comprehensive plan in 1988 to promote tourism Various states in India declared tourism as an industry The government stressed on private-public partnership in the sector Government policies give a fillip to the hotel industry A national policy on tourism was announced in 2002, focusing on developing a robust infrastructure Online travel portals & low-cost carrier airlines gave a boost to domestic tourism The government has undertaken various marketing initiatives to attract tourists In April 2008, the Ministry of Tourism opened its 1 st tourist office in Beijing, marking its 1 st office in China & only its 14 th overseas Domestic spending on tourism accounted for over 82.7 per cent of total tourism revenues in April 2016 Nearly 88,90,000 foreign tourists visited India during January 2016 to December 2016, registering a growth of 10.4 per cent over the previous year. Source: WTTC, Ministry of Tourism, TechSci Research 7

8 SEGMENTS OF TOURISM AND HOSPITALITY Accommodation and catering Accommodation could be hotels & motels, apartments, camps, guest houses, lodge, bed & breakfast establishments, house boats, resorts, cabins & hostels. In addition, tourists also require catering facilities, which includes include hotels, local restaurants, roadside joints, cafeterias & retail outlets serving food & beverages. Transportation Comprises airline companies, cruise services, railways, car rentals & more. A tourist s choice of transport would depend on the travel budget, destination, time, purpose of the tour & convenience to the point of destination. Tourism and hospitality Attractions Another major component of the travel & tourism industry is attractions such as theme parks & natural attractions including scenic locations, cultural & educational attractions, monuments, events & medical, social or professional causes. Travel agents A fragmented sector with a number of independent travel agents & many online businesses. They also sell associated products such as insurance, car hire & currency exchange. Business travel agencies specialise in making travel & accommodation arrangements for business travellers & promoting conference trades. Tour operators Offer customised tours, including travel, accommodation & sightseeing Source: Dun and Bradstreet s Report on Tourism in India 8

9 EMERGING TOURISM AND HOSPITALITY SEGMENTS One of the biggest contributor to tourism industry. India being religious hub for different cultures attracts a large number of tourists every year The aim is to develop interest in heritage and culture; & promote visits to village settings to experience & live a relaxed & healthy lifestyle Pilgrimage tourism Rural tourism Adventure tourism A wide range of adventure sports are covered under this category with specialised packages The activities include mountaineering, trekking, bungee jumping, mountain biking, river rafting & rock climbing Vast variety of flora & fauna in various states is a major factor behind their growing popularity as tourist destinations. Thenmala in Kerala is the 1st planned ecotourism destination in India. Eco-tourism Luxury tourism Heritage tourism Medical tourism Tourists seek specialised medical treatments, mainly ayurvedic, spa & other therapies The primary purpose is achieving, promoting or maintaining good health & a sense of well-being Tourists visit India for its cultural heritage in various cities The luxury travel market in India registered a growth rate of 12.8 per cent in 2016, the highest in comparison with any other BRIC country. The country s rich heritage is amply reflected in the various temples, majestic forts, pleasure gardens, religious monuments, museums, art galleries, urban & rural sites Source: Dun and Bradstreet s Report on Tourism in India 9

10 RISING CONTRIBUTION TO INDIA S GDP (1/2) Tourism in India accounts for 9.6 per cent of the GDP & is the 3 rd largest foreign exchange earner for the country The tourism & hospitality sector s direct contribution to GDP in 2016, was USD71.53 billion During E, direct contribution of tourism & hospitality to GDP is expected to register a CAGR of per cent The direct contribution of travel & tourism to GDP is expected to reach USD billion by Direct contribution of tourism and hospitality to GDP (USD billion) CAGR: 14.05% E2027F Source: World Travel & Tourism Council s Economic Impact 2017, News Article, TechSci Research Notes: CAGR Compound Annual Growth Rate, E - Estimates, GDP stands for Gross Domestic Product, The definition of direct, indirect and induced contribution is specified in the Glossary on Slide 41 10

11 RISING CONTRIBUTION TO INDIA S GDP (2/2) The sector s total contribution to GDP stood at USD208.5billion (9.6 per cent of GDP) in 2016, witnessing growth from USD88 billion in 2007 & is expected to further grow to USD423.7 billion by 2027 The total contribution of travel & tourism to Indian GDP is forecasted to increase at a CAGR of 9.72 per cent to USD222.5 billion by 2017 In December 2016, the country earned foreign exchange of around USD 2.12 billion, from the tourism sector Travel and tourism s total contribution to GDP (USD billion) CAGR: 9.72% E 2027F Source: World Travel & Tourism Council s Economic Impact 2017, News Article, TechSci Research Note: E Estimated Note: The definition of direct, indirect and induced contribution is specified in the appendix 11

12 FOREIGN ARRIVALS ARE RISING (1/2) In 2015, foreign tourist arrival in India stood at over 8 million & accounted for over 8.8 million in 2016 Foreign tourists arriving in India (million) In 2016, the country is expected to witness footfall of around 9 million foreign tourists, thereby witnessing a growth of around 12 per cent, from the 8 million visitors last year Foreign tourist arrivals into the country is forecast to increase at a CAGR of 7.1 per cent during By 2025, foreign tourist arrivals in India is expected to reach 15.3 million, according to the World Tourism Organisation In December 2016, over 1,62,250 foreign tourists arrived on e-tourist Visa, in comparison with 103,617 foreign tourists in December 2015, registering a growth of 56.6 per cent over the previous year CAGR: 7.1% As of December 2016, 8.8 million tourists have visited India, mostly from UK, US & Bangladesh. This has been due to flexible government policies, developed rail & road infrastructure, ease in availability of e-visas to foreign tourists. Source: World Travel & Tourism Council s Economic Impact 2015, Ministry of Tourism, TechSci Research E- Estimated 12

13 FOREIGN ARRIVALS ARE RISING (2/2) Foreign exchange earnings from tourism accounted for USD23.15 billion in 2016, witnessing growth at a CAGR of 10.4 per cent during In FY16, foreign exchange earnings from the tourism sector stood at USD23.15 billion Foreign Exchange Earnings through tourism during the month of March 2017 were USD billion as compared to USD billion in March 2016 and USD billion in March Foreign exchange earnings from tourism in India (USD billion) Source: Ministry of Tourism, TechSci Research 13

14 MAJOR COMPANIES ACROSS SEGMENTS Company Segment Revenue (USD millions) Other major players Online booking FY14 FY15 FY16 Yatra.com, cleartrip.com, travelocity.com, travelchacha.com, ixigo.com Hotel ITC, Oberoi, Marriott Airlines (1) Tour operators FY14 FY15 FY FY14 FY15 FY FY14 FY15 FY16 SpiceJet, Indigo, Indian Airlines SOTC, Raj Travels Source: Respective company websites Notes: (1) Highlights revenues are in billion 14

15 DOMESTIC CONSUMERS TO LEAD GROWTH Domestic travel revenues are expected to reach USD billion in 2016 are anticipated to further increase to USD203.3 billion by 2026 Revenues earned from foreign visitors are expected to reach USD25.02 billion in 2016 & are projected to further increase to USD40.11 billion by 2026 Indian travellers booked 52 per cent more trips in the 3 rd quarter of 2016 as compared to last year. Out of total Indian travellers, in 2016,17 per cent people were in the age bracket years, compared to 12 per cent in the previous year, which was mainly due to the increasing usage of smartphones by the young travellers, Share of tourists by expenditure (2016) Expected share of tourists by expenditure (2026) 12% Domestic Spending 16.5% Domestic spending 88% Foreign Visitor Spending 83.5% Foreign visitor spending Source: World Travel & Tourism Council s Economic Impact 2016, TechSci Research Note: E- Estimated 15

16 RISING REVENUES FROM LEISURE AND BUSINESS SEGMENTS Share of revenues from leisure travel to the total tourism revenue stood around 94.6 per cent in 2016 Revenues from leisure travel reached USD billion in 2016 are anticipated to reach to USD203.5 billion by 2026 Business travel revenues are expected to stand at around USD11.25 billion in 2016 & are projected to increase to over USD39.88 billion by 2026 Segment-wise revenue share (2016E) Expected segment-wise revenue share (2026) 5.4% Leisure spending Business spending 16.4% Leisure spending Business spending 94.6% 83.6% Source: World Travel & Tourism Council s Economic Impact 2016, TechSci Research Note: E- Estimated 16

17 NOTABLE TRENDS IN THE TOURISM INDUSTRY IN INDIA Online travel operators Wellness tourism Cruises Adventure Camping sites Spiritual tourism Over 70 per cent of air tickets are now being booked online in the country A number of online travel & tour operators, which provide better prices & options to consumers, have emerged in India The widespread practice of ayurveda, yoga, siddha & naturopathy that is complemented by the nation s spiritual philosophy makes India a famous wellness destination. Government of India has estimated that India would emerge with a market size of 1.2 million cruise visitors by Adventure tourism is one of the most popular segments of tourism industry. Owing to India s enormous geo-physical diversity, it has progressed well over the years Part of India s tourism policy, almost every state has definite programme to identify & promote Adventure tourism Promotion of camping sites has been encouraged with adequate acknowledgement of its adverse effects on environment Besides providing unique rewarding experiences, responsible conduct of camping can be a major source for both additional economic opportunities in remote areas as well as an instrument of conservation India has been known as the seat of spiritualism & India s cosmopolitan nature is best reflected in its pilgrim centers India has been recognised as a destination for spiritual tourism for domestic & international tourists On February 17, 2017, Railways will launch a train for religious tourists. The journey would begin from Guwahati & cover shrines in West Bengal & Orissa. Source: Incredible India, TechSci Research 17

18 PORTERS FIVE FORCES ANALYSIS

19 Competitive Rivalry PORTERS FIVE FORCES ANALYSIS The Indian hospitality sector is highly fragmented with a large number of small and unorganised players; this increases competition Customers low switching cost and price sensitivity are increasing competition among players Threat of New Entrants (Moderate) Threat of New Entrants Substitute Products Entry is easy as it is not capital intensive, but a player needs to achieve economies of scale and access to distribution channel to compete Threat of substitute products is minimal as no substitutes are available in the market Bargaining Power of Customers (High) Competitive Rivalry (High) Threat of Substitute Products (Low) Bargaining Power of Suppliers There is the threat of forward integration; for instance, the airline starts selling directly to customers The cost of switching suppliers is low Bargaining Power of Customers Low switching cost gives customer high bargaining power Customers are price sensitive and have information about the services being provided Bargaining Power of Suppliers (Moderate) Source: TechSci Research 19

20 STRATEGIES ADOPTED

21 STRATEGIES ADOPTED Marketing strategy One stop solution Players are using innovative marketing strategies to succeed in this sector. For example: The Goa Tourism Development Corporation (GTDC) is planning to organise familiarisation trips or fam trips for international tour operators to showcase Goa as a tourist destination. It has also planned to promote Goa in international markets through the print & electronic media. Benefits such as such as priority reservation & Indian rail pass for train travel are also being extended to foreign tourists Ministry of Tourism organized the 1 st ever Incredible India Tourism Investors Summit in September 2016, to bring together state governments & global & domestic investors, for funding investment ready projects in the country Players are trying to ensure convenience for their customers by providing all services available on a single portal. For example, makemytrip.com & a host of other websites provide a comprehensive basket of offerings which include outbound & inbound travel for leisure & business trips, hotels & car booking, holiday packages within India or abroad, etc Multiple channels Branding M-visa E Tourist Visa Players are opting for many channels to maximise sales & ensure convenience for their customers. For example, Thomas Cook & Kuoni India launched their online portals to compete with others. On the other hand, makemytrip.com is planning to go for the offline channel to complement its existing portal & has already launched mobile apps for maximising sales. The launch of several branding & marketing initiatives by the Government of India such as Incredible India! and Athiti Devo Bhava provides a focused impetus to growth Indian government has also released a fresh category of visa the medical visa or M visa, to encourage medical tourism in India. Indian medical tourism is expected to reach USD8 billion by 2020 In December 2016, a total of 1,62,250 foreign tourists arrived on e-tourist Visa, in comparison with 103,617 foreign tourists in December 2015, registering a growth of 56.6 per cent over previous year Source: Make in India, Company websites, TechSci Research Notes: CDMA Code Division Multiple Access, GSM Global System for Mobile Communication 21

22 GROWTH DRIVERS

23 GROWTH DRIVERS FOR THE TOURISM MARKET More than half of the Ministry of Tourism s Plan budget is channelised for funding the development of destinations, circuits, mega projects as well as rural tourism infrastructure projects Growing demand Domestic expenditure on tourism is expected to rise due to the growing income of households A number of niche offerings such as medical tourism & eco tourism are expected to create more demand Infrastructure Growth drivers Policy support Tourism & hospitality will be having a cumulative FDI inflows of USD 12.7 billion in FY16 & FY17 International hotel brands are targeting India. e.g. Carlson group is aiming to increase the number of its hotels in India to 170 by 2020 Hospitality majors are entering into tie ups to penetrate deeper into the market, such as Taj & Shangri-La entered into a strategic alliance to improve their reach & market share by launching loyalty programme aimed at integrating rewarded customers of both hotels. Rising FDI Source: Make in India, DIPP, TechSci Research 100 per cent FDI is allowed under the automatic route in tourism & hospitality, subject to applicable regulations & laws 100 per cent FDI allowed in tourism construction projects, including the development of hotels, resorts & recreational facilities Campaigns such as Incredible India & Athithi Devo Bhava were launched to harness the tourism industry s potential 23

24 TOURISM AND HOSPITALITY RISE IN INCOME AND CHANGING DEMOGRAPHICS BOOSTING DEMAND Rising incomes mean a steady growth in the ability to access healthcare & related services Per capita income in India Per capita income is expected to increase at a CAGR of 7.33 per cent over According to IMF, nominal per capita income in the country is estimated to increase at a CAGR of 4.94 per cent during Per capita income in India is expected to grow at a CAGR of 8.09 per cent, during % 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% % GDP per capita, current prices Growth Rate Source: IMF, TechSci Research Note: E Estimated, F- Forecast 24

25 INCREASING SPENDING ON TOURISM Domestic expenditure on tourism (USD billion) CAGR: 13.00% E 2027F Domestic expenditure on tourism has grown significantly; In 2016, the market is reached to USD billion, representing growth at a CAGR of per cent during , which is further anticipated to increase to USD billion by Source: WTTC - Travel & Tourism Economic Impact 2017, TechSci Research Note: F Forecast, E Estimated 25

26 GOVERNMENT INITIATIVES 2015 Swadesh Darshan Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) National Tourism Policy 2015 Based on specific themes, government had identified 5 circuits which includes Krishna Circuit, Buddhist Circuit, Himalayan Circuit, North East Circuit & Coastal Circuit Tajmahotsav: the 10 day celebration provide a platform to experience India s arts, craft, culture, cuisine, dance & music. Under Budget 2017, the government allotted USD million for Integrated development of tourist circuits under Swadesh Darshan scheme. National Mission on Pilgrimage Rejuvenation & Spiritual Augmentation was implemented by the Ministry for enhancing the facilities provided & infrastructure at pilgrimage centres of all cities Formulation of National Tourism Policy 2015 that would encourage the citizens of India to explore their own country as well as position the country as a Must See destination for global travellers Under Union Budget 2017, USD14.87 million was allocated for promotion & publicity of various programmes & schemes of the Tourism ministry. Tourism Projects In FY15, USD1.13 million has been sanctioned to Kerala for development of tourism in the state In October 2015, Andhra Pradesh government signed MoUs for 8 tourism projects worth USD203.1 million Under Union Budget , the government allocated USD15.25 million for development of Umiam Lake-Ulum Sohpetbneng-Mawdiangdiang under North East Circuit of Swadesh Darshan Scheme & USD11.53 million for development of Buddhist sites of MP (Mandsaur- Dhar- Sanchi- Satna- Rewa) Source: Union Budget , TechSci Research 26

27 TOURISM POLICY AND INITIATIVES GIVE A BOOST TO THE INDUSTRY Five Year Plan In the 12 th Five Year Plan, a budgetary support of USD2.8 billion has been approved for the Ministry of Tourism for the development of tourism infrastructure projects, including rural tourism & human resource development projects Under the plan, USD1.3 billion has been allocated for the Ministry of Culture Special boards The Ministry has set up a Hospitality Development & Promotion Board, which will monitor & facilitate hotel project clearances/approvals Tourist police The Ministry, in consultation with state/ut administrations, has proposed to employ tourist police at prominent tourist spots Allocation for North- Eastern regions The government has planned an investment of USD391.9 million for the development of North-Eastern region in the Union Budget for FY16 Tax incentive An investment-linked deduction under Section 35 AD of the Income Tax Act is in place for establishing new hotels in the 2-star category and above across India, thus permitting a 100 per cent deduction in respect of the whole or any expenditure of a capital nature Source: World Travel & Tourism Council, Union Budget , TechSci Research 27

28 TOURISM POLICY AND INITIATIVES GIVE A BOOST TO THE INDUSTRY National Tourism Policy 2015 The new policy i.e. National Tourism policy 2015 aims at value addition to the previous policy and trying to overcome its deficiencies. The S s used in previous National Tourism policy 2002 i.e., Swagat (welcome), Soochna (Information), Suvidha (Facilitation), Suraksha (Security), Sahyog (Cooperation), Samrachana (Infrastructure Development) & Safai (Cleanliness) have been given prime importance in National Tourism policy Incentives from Ministry of Tourism Assistance in large revenue-generating projects. Support to Public Private Partnerships in infrastructure development such as viability gap funding. Schemes for capacity-building of service providers. Project Mausam Under Project Mausam the Government of India has proposed to establish cross cultural linkages & to revive historic maritime cultural & economic ties with 39 Indian Ocean countries. In 2015, Government of India linked China Silk Road project with Project Mausam. E Tourist Visa In March 2016, 150 countries will be designated to get e tourist visa Till October 2015, e- tourist visa facility has been extended to 113 countries Growth of 56.6 per cent was registered during the month of December 2016, as a total of 1,62,250 tourists arrived in India on E Tourist Visas, as against a total of 103,617 tourists during December Foreigners travelling to India on e-tourist visa are likely to receive a BSNL SIM card from September 2017 end. Source: World Travel & Tourism Council, TechSci Research 28

29 CONTINUED GROWTH IN INVESTMENTS IN THE TOURISM SECTOR Capital investments in the tourism sector (USD billion) Collective government spending on tourism (USD billion) 7 CAGR: 6.2% CAGR: 6.8% E 2025F E 2025F Capital investments in the tourism sector are expected to increase at a CAGR of 6.2 per cent during E Berggruen Hotels is planning to add around 20 properties under its mid-market segment 'Keys Hotels' brand across India, by 2018 International hotel chains are increasing their presence in the country, as it will account for around 47 per cent share in the Tourism & Hospitality sector of India by 2020 & 50 per cent by 2022, increasing from 44 per cent in As of March 2017, Hilton plans to add 18 hotels pan India by 2021, along with 15 operational hotels under its brands namely Hampton, Hilton Garden Inn, Conrad, Hilton Hotels & Resorts & DoubleTree by Hilton. In 2017, Novotel is to open its 1 st hotel in Guwahati, near the Shillong-Guwahati highway having 118 contemporary rooms, with banquets & meeting rooms best suited for holiday & business trips. Government s collective spending on tourism & hospitality sector, in 2016, stood at around USD2.2 billion During (till March 2016), collective government spending on tourism sector is expected to grow at a CAGR of 6.8 per cent By 2025F, the government s collective spending is expected to increase to USD7.0 billion In 2017, Marriott International plans to open 30 new luxury hotels. InterContinental Hotels Group PLC (IHG), a British multinational hotel company, to divest its 24 per cent in its joint venture with Duet Hotels India (DIH). Source: World Travel & Tourism Council s Economic Impact 2015, TechSci Research Note: E Estimated, F- Forecast 29

30 GROWTH IN VISA ON ARRIVAL Growth in visa on arrival In June 2016, the Indian government approved 150 countries under the Visa on Arrival scheme to attract additional foreign tourists. The Visa on Arrival scheme registered an average growth of per cent over CAGR: % Indian government has also released a fresh category of visa the medical visa or M visa, to encourage medical tourism in India Source: Ministry of Tourism, TechSci Research 30

31 GROWTH IN E-TOURIST VISA Growth in e tourist visa In November 2014, GoI had launched Tourist Visa on Arrival(TVoA) which is enabled by Electronic Travel Authorisation (ETA), known as the e Tourist Visa scheme for 43 countries The scheme was extended to Guyana and Sri Lankan citizens in January 2015 and April 2015 respectively In June 2015, this scheme was further extended to 31 countries A total of tourists had arrived on e tourist visa during November 2015 as against a total of tourists during November 2014 exhibiting an increase of per cent In December 2016, a total of 1,62,250 foreign tourists arrived on e-tourist Visa, in comparison to 103,617 foreign tourists in December 2015, registering a growth of 56.6 per cent over the previous year Nov 15-Nov Nov 2014 Nov Sept, 2015 Sept, Dec, 2015 Dec,2016 Source: Ministry of Tourism, TechSci Research 31

32 OPPORTUNITIES

33 NICHE SEGMENTS OFFER GOOD OPPORTUNITIES Medical tourism Cruise tourism Rural tourism Ecotourism The presence of world-class hospitals & skilled medical professionals makes India a preferred destination for medical tourism India s earnings from medical tourism could exceed USD8 billion by 2020 Tour operators are teaming up with hospitals to tap this market 201 thousand medical tourists arrived in India in the 2016 as compared to 134 thousand in Cruise shipping is one of the most dynamic & fastest growing segments of the global leisure industry Government of India has estimated that India would emerge with a market size of 1.2 million cruise visitors by Moreover, India is looking to take advantage of its 7,500Km coastline to tap growth potential of the cruise tourism segment. The potential for the development of rural tourism in India is high as most of its population resides in rural areas This can benefit the local community economically & socially, and facilitate interaction between tourists & locals for a mutually enriching experience India is often termed as hotspot of biodiversity & this rich natural heritage is unparallel in many ways. Such valuable resource base gives impetus for the practice of variety of alternate tourism forms & many of which are already in existence. For example: The national parks, wildlife sanctuaries & biosphere reserves Source: Ministry of Tourism, BMI, TechSci Research 33

34 LEADING STATES/UTs IN TERMS OF FOREIGN TOURISTS Delhi Attracted 10.2 per cent of foreign tourists visiting India in Major attractions Qutub Minar, Red Fort, Humayun s Tomb, India Gate, Jantar Mantar & Jama Masjid Uttar Pradesh Attracted 13.3 per cent of foreign tourists and 14.3 per cent of domestic tourists in 2015 Major cities to visit Agra, Allahabad, Ayodhya, Lucknow, Fatehpur, Meerut and Varanasi Major attractions Taj Mahal, Agra Fort, Fatehpur Sikri & Sarnath West Bengal Attracted 6.4 per cent of foreign tourists visiting India in 2015 Maharashtra Attracted 18.9 per cent of foreign tourists visiting India in 2015 Major cities to visit Amravati, Kolhapur, Mumbai & Nashik Major attractions Ajanta & Ellora Caves, Shirdi, Ashtavinayak & Matheran Major attractions Victoria Memorial, Sunderbans, Cooch Behar Palace, Darjeeling Himalayan Railway, Hazarduari Palace, Adina Mosque, Shantiniketan, Bishnupur Terracotta Temples, Dakshineswar Kali Temple Tamil Nadu Attracted 20.1 per cent of total foreign tourists visiting India in 2015 Major cities to visit Chennai, Coimbatore, Kanyakumari, Madurai, Ooty, Rameswaram & Salem Major attractions Meenakshi Temple, Brihadeeswarar Temple, Yelagiri Hills, Hogenakkal Falls & Vivekananda Memorial Source: TechSci Research Note: As per latest data available 34

35 FOREIGN TOURIST ARRIVALS SET TO RISE Forecasts of foreign tourists arriving in India (million) Forecasts of foreign exchange earnings from tourism in India (USD billion) Foreign tourist arrival into the country is expected to increase at a CAGR of 6.6 per cent during , with a total of 8.89 million foreign tourists coming into India in The foreign exchange earnings from tourism sector In 2016 stood at USD23.1 billion Source: Ministry of Tourism, BMI, TechSci Research Notes: F stands for Forecasts, CAGR Compound Annual Growth Rate 35

36 AIRLINES INDUSTRY SET TO FLY HIGHER Low-cost airlines Growth in low-cost airlines is expected to lower tourism costs & increase domestic spending on tourism Increase in international flight operators The market is likely to become more competitive due to the entry of an increasing number of international flight operators expected to offer improved services to tourists. JVs such as Air Asia and Tata SIA are beginning services in India and can provide better services Some new players that have entered the country are Etihad & Vistara. In 2015, Air Pegasus started its services for South India Increasing number of airports The Airports Authority of India aims to start operating 250 airports across the country by In FY2016, the number of operational airports in the country was estimated to be 95 Higher investments The government is expected to earmark USD12.4 billion in the 12 th Five-Year Plan ( ); Of these, private investments are likely to be USD9.2 billion. In Union Budget , the government has planned to revive 160 airports at an indicative cost of USD7.6 million USD15.3 million, each. In the Union Budget , the government has proposed to establish five special tourism zones, and increase the focus towards rural infrastructure development and introduction of bio-toilets Higher passenger traffic By 2020, passenger traffic at Indian airports is expected to increase to 450 million people in comparison with around million people in 2016 Source: World Travel & Tourism Council, TechSci Research 36

37 SUCCESS STORIES

38 INCREDIBLE INDIA: AN INCREDIBLE SUCCESS Incredible India is a marketing campaign launched by the Government of India in 2002 to promote India as a tourist destination internationally Growth in foreign tourist arrivals pre and post Incredible India (million) Foreign tourist arrivals increased at a CAGR of 7.1 per cent during E to 15.3 million by the end of 2025 India currently attracts 0.63 per cent of tourists from world over; the government aims to increase it to 1 per cent In 2012, India Tourism launched 2 new campaigns: Find What You Seek, an international campaign; & Go Beyond, a domestic campaign CAGR: 7.1% In 2013, the Ministry of Tourism had welcomed the launch of a campaign 777 days of the Indian Himalayas as a step to promote the Himalayan states as well as the gateway cities which are entry points for domestic & international tourists In 2015, Ministry of Tourism has launched new TV advertisement campaign through which 4 films have been made on the theme of Adithi Devo Bhava which spreads awareness that conveys on how to extend hospitality by adopting friendly attitude towards tourists visiting India Source: Incredible India, Ministry of Tourism, TechSci Research Note: (1) Data is for January April 2016 E- Estimated 38

39 GUJARAT TOURISM: A PARADIGM SHIFT Gujarat is the 7 th largest state, located in the Western part of India, with the longest coastline of 1,600 km Contribution of tourism to Gujarat's GDP The government spent nearly USD13 million for the Khusbhoo Gujarat Ki campaign, which featured Amitabh Bachchan, brand ambassador of the state; the campaign was a huge success 8.2% 10.2% The campaign led to an increase in the number of visitors to 5.4 million in the last 2 years i.e & % 2.8% 3.5% 5% The government plans to focus on the state's 1,600 km coastline to promote maritime, coastal & ecotourism In September 2016, Airbnb, a community-driven hospitality company, announced that it had signed an MoU with the Government of Gujarat, so as to boost tourism & create memorable travel experience in the state E 2022E Source: World Travel & Tourism Council s Economic Impact 2013, TechSci Research Note: E Estimates 39

40 TOURISM AND HOSPITALITY KERALA: A BLEND OF GOOD MARKETING AND NATURAL BEAUTY Kerala is on the Malabar coast in Southwest India Revenue generated from tourism in Kerala (USD billion) In the early 1990s, the state was known as a single beach destination Kerala successfully marketed its serene backwaters, wildlife sanctuaries, ayurvedic treatments & temple festivals During , revenue from tourism sector increased at a CAGR of over 9.74 per cent In 2016, Kerala Tourism generated revenue of USD4.41 billion Foreign exchange earnings Total tourism revenues Number of tourists visiting Kerala annually (in million) Domestic Tourist Foreign Tourist Source: Kerala Tourism, TechSci Research E: Estimated 40

41 PRIVATE SECTOR PIONEERS: makemytrip.com Makemytrip.com The website was conceived and founded by Deep Kalra in 2000 Makemytrip offers airline tickets, hotel bookings, domestic & foreign packaged tours, bus tickets, corporate travel services, visa assistance, foreign exchange & travel insurance The company s revenues totalled USD139 million in FY15 & reached USD108 million in FY16 In FY16, revenue from the company is estimated at USD108 million During FY11-16, company s revenues expanded at a CAGR of over 12.1per cent As of October 2016, MakeMyTrip Ltd. has agreed to acquire travel business of Ibibo Group India, at an estimated cost of USD720 million Revenues (USD million) CAGR: 12.1% FY11 FY12 FY13 FY14 FY15 FY16 Source: 41

42 PRIVATE SECTOR PIONEERS: IHCL Indian Hotel Company Limited (IHCL) Revenues (USD million) The company was incorporated in 1902 & launched the 1st hotel in India, The Taj Mahal Palace & Tower, in Mumbai in 1903 Taj Hotels Resorts & Palaces has 66 hotels in 42 locations across India & 16 hotels worldwide IHCL operates in the luxury, premium, mid-market and value market segments through various brands such as Taj, Taj Exotica, Taj Safari, Vivanta, Gateway Hotel & Ginger IHCL operates Taj Air, a luxury private jet service The company operates Taj Sats Air Catering Ltd, the largest airline catering service in South Asia IHCL s revenues stood at USD471 million in FY16 FY11 FY12 FY13 FY14 FY15 FY16 Source: IHCL s website 42

43 USEFUL INFORMATION

44 INDUSTRY ASSOCIATIONS Federation of Hotel & Restaurant Associations of India (FHRAI) B-82, 8 th Floor, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi Phone: Fax: Hotel Association of India (HAI) B Som Dutt Chamber-I, Bhikaji Cama Place, New Delhi Phone: /14 Fax:

45 GLOSSARY Direct contribution: Spending on accommodation, transportation, attractions and entertainment Indirect contribution: Travel and tourism investment spending, and government collective travel and tourism spending Induced contribution: Spending of direct and indirect employees GOI: Government of India CAGR: Compound Annual Growth Rate INR: Indian Rupee USD: US Dollar Wherever applicable, numbers have been rounded off to the nearest whole number 45

46 STEEL EXCHANGE RATES Exchange rates (Fiscal Year) Year INR equivalent of one USD E Exchange rates (Calendar Year) Year INR equivalent of one USD (Expected) Source: Reserve bank of India, Average for the year 46

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